- 45 -
benefits while the former give rise only to long-term benefits.
The experience of our predecessor, the Board of Tax Appeals, and
other courts in an earlier era lead us to doubt the sharpness of
that distinction.10 Moreover, no case distinguishes between
advertising execution and campaign expenditures, and the long-
term, short-term distinction respondent would draw is
incompatible with section 1.162-1(a) and 20(a)(2), Income Tax
Regs., and Rev. Rul. 92-80, 1992-2 C.B. 57. Respondent’s
distinction will not hold; the litigated expenses are advertising
expenditures that are ordinary business expenses.
Because we have concluded that the litigated expenses are
ordinary business expenses on the grounds stated, we need not
address petitioner’s alternative theories that the litigated
expenses are recurring expenses or are deductible under section
174.
10 See, e.g., Northwestern Yeast Co. v. Commissioner, 5 B.T.A.
232, 237 (1926), discussed supra sec. I.C.3., and quoted in part
as follows:
Generally and theoretically, therefore, it is safe
to say that some part of the cost of a campaign or
system of promotion may be of permanent significance
and may be regarded as a capital investment rather than
a deductible expense. But how far in a given case the
recognition of this doctrine may require the
capitalization of some expenditures and the charging
off of others is hard to say. Clearly, when the
question is submitted for judicial consideration, it
may not be answered ab inconvenienti by an arbitrary
rule.
Page: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 NextLast modified: May 25, 2011